The government has made nearly half a billion pounds of incentives a year available to make British householders behave more like rational consumers.

To claim a share of the money before 2005 you have to spend it on energy efficiency measures, which could shave hundreds of pounds a year off every household's gas and electricity bills as well as protect the environment.

Carbon emissions from power stations, industry and motor vehicles are a major contributor to climate change, which has been blamed for droughts, floods, lost habitats for wildlife and devastation for farmers.

As part of the international agreement to tackle climate change, the UK has promised to cut carbon emissions by 60 per cent by 2050. This year an energy White Paper was published setting out how progress will be made: broadly half the reduction will be from switching to renewable 'clean' energy sources and half from cutting the amount of energy we use.

About half the energy efficiency savings are expected to be from business - including transport - and half from the home. Nearly one third of all UK carbon emissions are domestic, and the average household generates more carbon pollution than a car. The measures sound expensive, but the Government's Energy Saving Trust calculates the average home could save £200 off its £620 domestic fuel bills if all the recommended improvements were implemented. Some suppliers estimate the saving could be £260.

Sadly, not many people make the improvements. There are many ways people can reduce energy at home, says the EST. Fitting draught excluders to doors and windows, sealing floorboards and skirtings, closing cur-tains at dusk and turning off lights, TVs and videos can help. Turning down the ther mostat by 1 degree could save £30 a year. But by far the most money could be saved by investing in energy-saving appliances, wall and loft insulation or efficient light bulbs.

Because most people don't, the Government has passed regulations forcing energy suppliers to reduce the amount of carbon used by customers. This encourages the suppliers to pass on incentives to customers.

The help comes in the form of grants, discounts and interest-free loans to reduce the cost of high street products or home improvements. It starts with the light bulb, which suppliers sell for as little as £2 each compared to at least £5 in the high street. Each bulb can cut £7 a year off the electricity bill.

At the top end, energy suppliers offer help to pay for loft and cavity-wall insulation - the most cost-effective way of saving energy, says the EST. British Gas, for example, will pay £59 towards the £300 cost of filling the walls of a typical three-bedroom semi-detached house. Other companies offer even bigger discounts - up to 90 per cent in one case. This type of insulation should knock £70-£100 a year off bills. Schemes to encourage homeowners to replace their old boiler with a more efficient model are also popular.

Many suppliers have alliances with retailers and other specialists. Recently Powergen announced £60-£120 off the normal retail price for the most efficient A-rated fridges and freezers from Currys stores. The special discounted fridges would still cost £50 and fridge-freezers £75 - but customers will save £46 a year off their bills, recouping the cost in at most two years. The offer is only available to people with an old model on certain benefits. But other offers are available to everyone. Powergen, again, sells a multi-plug adaptor which automatically de-powers and boosts up linked gadgets when the computer is switched off and on. Power gen's model costs £17 and the company claims it will save £7 a year.

There is still concern, however, that customers need even more encouragement. The Energy White Paper this year suggested the obligation on suppliers to cut emissions would be extended, raising the prospect of more customer incentives in future.

The EST and energy companies, however, are asking the Government to go further: for example, to reduce VAT on the most efficient products or put an extra tax on the least efficient, and use some of the winter fuel payments for elderly people to pay for more energy-efficiency work on their homes.

The biggest prize of all, though, would be a reduction in stamp duty for homes that were more efficient. Said Powergen's energy efficiency manager Mike Newell: 'It's not easy to persuade people to invest in energy efficiency. Lower stamp duty would be a sufficiently large amount of money.'